1. Explain, using your own words, how firms can increase prots by adjusting their output level if currently MR :: MC. 2. Explain. using your own words, how firms can increase prots by adjusting their output level if currently MR a MC. 3. One ofthe four characteristics of a perfectly competitive market assumes that firms have perfect information. Discuss how realistic this assumption is. 1What economic conditions would justify a rm shutting down in the short-run? Explain the difference between economic and accounting prots. Describe the shortrun shutdown rule as it applies to perfectly competitive firms. Explain why profits are positive when price is above average total cost. The following gure illustrates the cost functions for a farm. Use the information to answer the following questions. Marginal Cost and Average Cost Functions 53:495-th % Costa 3- ATE E wvc % - MC P3 - P? - - - - P] ll] 10 El] 30 Quantity a. Describe the production decision for the farm ifthe current market price is at P3. Determine if the firm would need to shut down and if prots are positive or negative. b. Describe the production decision for the farm ifthe current market price is at P2. Determine if the firm would need to shut down and if prots are positive or negative. C. Describe the production decision for the farm if the current market price is at P1. Determine if the firm would need to shut down and if profits are positive or negative